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This excerpt taken from the WBMD 10-Q filed May 11, 2009. Charges
from HLTH to WebMD:
Corporate Services: We are charged a services
fee (which we refer to as the Services Fee) for costs related to
corporate services provided to us by HLTH. The services that
HLTH provides include certain administrative services, including
payroll, accounting, tax planning and compliance, employee
benefit plans, legal matters and information processing. In
addition, we reimburse HLTH for an allocated portion of certain
expenses that HLTH incurs for outside services and similar
items, including insurance fees, outside personnel, facilities
costs, professional fees, software maintenance fees and
telecommunications costs. HLTH has agreed to make the services
available to us for up to five years following the IPO.
These expense allocations were determined on a basis that we and
HLTH consider to be a reasonable assessment of the cost of
providing these services, exclusive of any profit margin. The
basis we and HLTH used to determine these expense allocations
required management to make certain judgments and assumptions.
The Services Fee is reflected in general and administrative
expense within our consolidated statements of operations.
Healthcare Expense: We are charged for our
employees’ participation in HLTH’s healthcare plans.
Healthcare expense is charged based on the number of our total
employees and reflects HLTH’s average cost of these
benefits per employee. Healthcare expense is reflected in the
accompanying consolidated statements of operations in the same
expense captions as the related salary costs of those employees.
Stock-Based Compensation Expense: Stock-based
compensation expense is related to stock option issuances and
restricted stock awards of HLTH Common Stock that have been
granted to certain of our employees. Stock-based compensation
expense is allocated on a specific employee identification
basis. The expense is reflected in our consolidated statements
of operations in the same expense captions as the related salary
costs of those employees. The allocation of stock-based
compensation expense related to HLTH Common Stock is recorded as
a capital contribution in additional paid-in capital.
The following table summarizes the allocations reflected in our
consolidated financial statements:
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